ClearWater Market Commentary as of December 10th, 2021

Here is the ClearWater Market Commentary as of December 10th, 2021:

In this issue:
– Performance of Major Indices
– Market Commentary
– Last Week’s Key Economic  Events and Upcoming Events

Performance of Principle Indexes: 

S&P/TSX Composite Index
5 Day	0.14%
1 Month	-4.03%
YTD	19.83%
1 Year	19.04%

^{As of 2021/12/10 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
WTI Crude (oil)	8.60%	48.30%
Nasaq	2.66%	21.88%
S&P 500	2.62%	25.45%
Hang Seng Index	2.59%	-12.03%
Shanghai Composite	2.56%	5.99%
Nikkei 225	2.55%	4.36%
DAX	2.11%	14.93%
Dow Jones Industrial	2.11%	17.53%
CAC 40	2.02%	26.17%
FTSE 100	0.67%	12.70%
Russell 2000	0.28%	11.89%
S&P/TSX Composite	0.14%	19.83%

^{As of 2021/12/10 – Source: www.marketwatch.com}

Last week’s and next week’s key economic events:

US economy (S&P 500 2.62%):

• The S&P 500 Index recorded its best weekly gain since February, as fears seemed to abate about the new omicron variant of the coronavirus.
• Dr. Anthony Fauci, the president’s chief medical advisor, said in an interview over the previous weekend that there did not appear to be “a great deal of severity” in the new omicron variant, while cautioning that it was too early to be certain. Most of the benchmarks moved near their record highs, and the S&P Mid-Cap 400 Index reached a new peak on Friday.
• Investors also seemed reassured by news on Wednesday that early studies by Pfizer and its European partner BioNTech showed that a booster shot of their vaccine was effective against the new variant.
• Markets reacted favourably to the week’s economic news, with strong labor data being released.
• The multi-decade strength in the labor market however was reflected in multi- decade high levels of inflation, with the November consumer price index, reported Friday, rising 6.8% on a year-over-year basis, the biggest jump since 1982.

Canadian markets (S&P/TSX 0.14%):

• Canada’s main stock index moved lower, lagging U.S. markets which rose even though inflation numbers hit a 39-year high.
• The S&P/TSX composite index closed down 34.87 points to 20,890.62.
• Canada’s National Balance Sheet (Q3) showed debt-to-disposable income rising to 177.2% in seasonally-adjusted terms (from 176.7%). The debt service ratio fell to 13.3%, while net worth as a percentage of disposable income climbed to a towering 1026% amid surging stock and housing markets.
• Gross general government debt fell once again, down to 132.3% of GDP, and net debt-to-GDP dipped to 47.5%.
• The Bank of Canada (BoC) kept overnight rates unchanged at 0.25%. The BoC made minor adjustments to their forward guidance as they wait for more developments on the Omicron variant. Importantly, the BoC did not move forward their timeline for raising interest rates, continuing to aim for the middle quarters of 2022.

Performance 2021: S&P 500/400/600 Sectors

European and Asian economies:

• Shares in Europe rebounded as fears about the omicron variant of the coronavirus and its potential economic implications subsided.
• Pfizer and BioNTech shared laboratory results indicating that their booster vaccine could be effective against the omicron strain, helping to allay concerns about the possible economic ramifications.
• The European Central Bank could now also be increasing its asset purchases via its standard Asset Purchase Program once its emergency purchases end in March 2022.
• The UK government announced new coronavirus restrictions, a move that appeared to prompt the market to moderate its expectations for potential interest rate increases.
• Others, such as Germany, France, Denmark and Norway implemented stricter rules to contain the spread of the coronavirus but stopped short of announcing lockdowns. 
• UK GDP data has shown the economic growth is slowing. GDP expanded 0.1% in October, slowing from 0.6% in September, as the construction industry shrank due to rising costs and supply disruptions.
• Japanese equities made gains over the week. Markets appeared to take ongoing concerns about the omicron variant of the coronavirus and a downgrade to Japan’s third-quarter economic growth in stride.
• Prime Minister Fumio Kishida set out how his administration plans to carve out a new era for Japan in a policy speech to parliament, with areas of focus including digitalization opportunities, climate change mitigation, and strengthening the start-up ecosystem.
• In a policy speech to Japan’s parliament, Kishida gave an assessment of the country’s current state of COVID-19 infections, which is holding steady at a low level.
• The prime minister also made reference to the previously announced large-scale economic measures, amounting to JPY 55.7 trillion (USD 490 billion), to overcome the coronavirus and carve out a new era.
• On innovation, Kishida’s administration intends to dramatically strengthen the ecosystem surrounding start-ups, such as by reviewing the rules for becoming listed on an exchange, so that start-ups that have achieved listing are able to grow further.
• Chinese stock markets rose for the week after the central bank cut the reserve requirement ratio (RRR) for banks inflation concerns eased. The rate cut will release CNY 1.2 Trillion in long-term liquidity into the economy.
• However, worries about property sector defaults and the withdrawal of more U.S.-listed Chinese companies dampened sentiment after ride-hailing app Didi Global said it would delist from the New York Stock Exchange earlier this month.
• Property sector turmoil kept investors on edge amid reports of offshore debt restructurings for cash-strapped developers China Evergrande and Kaisa Group. Evergrande announced that it plans to engage with offshore creditors to formulate a restructuring plan. Meanwhile, Kaisa’s recent failure to secure sufficient support from creditors for a bond exchange indicated that a debt recast could be in the offering.
• In economic readings, China’s export growth slowed in November due to currency strength and weaker external demand. However, imports jumped amid the scramble to restock depleted commodities, such as coal.
• On the inflation front, China’s consumer price index rose 2.3% in November from a year ago compared with October’s 1.5% gain, reflecting higher food prices and a low base in the prior-year period.
• The Chinese Academy of Social Sciences, a leading government think tank, forecast that China’s economy would expand 5.3% in 2022 compared with estimated growth of 8% this year.

What to watch this week:

• Canadian Federal Fiscal Update
• Canadian inflation data
• Canadian and US housing data
• US and Chinese retail sales and industrial production data
• Chinese fixed asset investment data
• US, UK, Europe and Japan monetary policy announcements

• 

Sources: Bloomberg.com,Yardeni.com, Barron’s.com, Factset.com and Newyorkfed.org

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